You’re Doing It Wrong: How Your Decision-making Actually Increases Uncertainty and What To Do About It

Ever wonder why decisions fail even after the most rigorous analysis? Ever go back and redo the analysis and apply a different option without significantly better results? Subtracting out pathological and group dynamic issues, the problem isn’t your analysis. The problem is, almost everything you’ve ever been taught about decision-making and analysis and the techniques you were asked to use to make decisions has been fatally flawed.

The biggest part of that problem is that you’ve been completely unaware of it. As a result, we’ve all been trained to do more analysis or admonished to do a better job of it. It’s actually a self-defeating cycle where the “solution” is actually more of the same problem.

If we want better business performance (read: features, quality, profit, etc.) to be what the outside world sees, then we need a better understanding of what’s going on on the inside so that better performance on the outside is actually a reasonable expectation and not mere delusional wishful thinking. What’s going on on the inside is a function of decision-making. Therefore better performance requires better decision-making processes, not more of the same processes that lead to ineffective decisions.

The outside world sees the naked truth of performance. We know what we like about how that looks. However, how good it looks is a result of inner workings the outside world doesn’t see. If the inner workings are an established and sustained high-performance operation, then what’s left is to figure out how get there. Therein lies part of the problem. Often the problem is measuring the wrong things and just as often is the compounding error incurred when these wrong (or even right!) metrics are further analyzed deterministically.

Instead of moving towards a decision with great confidence, we’re actually unknowingly moving towards a decision with unfounded confidence. In fact, the decision we make in this fashion is fraught with extremely high built-in error and low tolerances for error. All because we don’t understand what’s going on but we think we do. Worse still, we were trained to be blind to reality while thinking we have deep understanding.

High performance operations use probabilistic decision-making approaches instead of deterministic approaches. Using relatively straight-forward tools, we can obtain performance data change from a deterministic approach to a probabilistic approach that uses performance prediction models. Even without going so far as to work with models, the benefits of being aware of the limitations in our traditional decision-making mechanisms will improve how you make your next product development or service-related decision.

A few simple techniques borrowed from lean thinking can be inserted into the natural, every day, ordinary work to give us everything we need to create and sustain a high performance operation. These same techniques give us non-measurement based tools to help sustain ongoing high performance behaviors by simply doing the basic tenets of the lean activities. Simple yet powerful means of pursuing and realizing high performance results are available to organizations just starting to sort themselves out as well as the highly experienced and mature organizations.

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